Cadence Design Systems, Inc.

Cadence Design Systems, Inc.

CDNSยทNASDAQ

$408.00

-1.5%
TechnologySoftware - Application

Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. The company offers functional verification services, including emulation and prototyping hardware. Its functional verification offering consists of JasperGold, a formal verification platform; Xcelium, a parallel logic simulation platform; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verification. The company also provides digital IC design and sign off products, including Genus logic synthesis and Joules RTL power solutions, as well as Modus software solution to reduce systems-on-chip design-for-test time; physical implementation tools, such as place and route, optimization, and multiple patterning preparation; and signoff products to signoff the design as ready for silicon manufacturing. In addition, it offers custom IC design and simulation products to create schematic and physical representations of circuits down to the transistor level for analog, mixed-signal, custom digital, memory, and radio frequency designs; and system design and analysis products to develop printed circuit boards and IC packages, as well as to analyze electromagnetic, electro-thermal, and other multi-physics effects. Further, the company provides intellectual property (IP) products comprising pre-verified and customizable functional blocks to integrate into customer's ICs; and verification IP and memory models to emulate and model the expected behavior and interaction of standard industry system interface protocols. Additionally, it offers services related to methodology, education, and hosted design solutions, as well as technical support and maintenance services. The company serves 5G communications, aerospace and defense, automotive, industrial and healthcare, mobile, consumer, and hyperscale computing markets. Cadence Design Systems, Inc. was incorporated in 1987 and is headquartered in San Jose, California.

At a Glance

Live Snapshot
Market Cap$112.53B
EPS4.0900
P/E Ratio99.76
Earnings Date07/27/2026

Intrinsic Alpha Methodology

Thesis Lenses

Signal ยท Driver ยท Risk

Signal

High confidence

Valuation multiple is elevated (P/E 99.8).

Valuation inputs: P/E 99.8, earnings yield +1.0%, momentum -1.5%.

If multiples stay elevated while momentum fades, downside repricing risk rises.

Driver

High confidence

Return profile is strong (ROE +20.3%, ROIC +14.1%).

Profitability stack: net margin +20.9%, ROE +20.3%, ROIC +14.1%.

Quality deterioration often appears in margins before it shows up in headline EPS.

Risk

High confidence

Downside profile looks controlled across current risk inputs.

Risk factors: liabilities/assets +46.1%, momentum -1.5%, net margin +20.9%.

Higher leverage with weak momentum and thin margins can amplify drawdown severity.

cdns

Cadence Design Systems, Inc. Market vs Earnings Trajectory

CDNS ยท NASDAQ

Loading price and EPS data...

Cadence Design Systems, Inc.

Cadence Design Systems, Inc. Fair Value Envelope

CDNS ยท NASDAQ

Our analysis suggests that CDNS has a fair value of HIDDEN per share in the Base Case projection. With shares currently trading at $408, this represents a potential HIDDEN relative to our calculated worth for Cadence Design Systems, Inc..

Intrinsic Value
Current Price: $408
3Y+31.0%
5Y+89.0%
10Y+476.0%
3Y+49.0%
5Y+97.0%
10Y+192.0%
3Y+31.0%
5Y+88.0%
10Y+446.0%
3Y+39.0%
5Y+91.0%
10Y+289.0%
3Y+42.0%
5Y+96.0%
10Y+306.0%
3Y+98.0%
5Y+157.0%
10Y+384.0%
Cadence Design Systems, Inc.

Cadence Design Systems, Inc. Profit Bridge

CDNS ยท NASDAQ
Revenue5.30B
Cost of Goods Sold (722.25M)
Gross Profit4.57B
Operating Expenses (2.92B)
Operating Income1.65B
Interest Expense (116.54M)
Other Income/Expense-127.74M
Pretax Income1.52B
Income Tax (413.15M)
Net Income1.11B
Net Income
1.11B

Profitability Analysis

Gross Margin

86.4%

Exceptional pricing power and cost management. The company retains over half of revenue after direct costs.

Operating Margin

31.1%

Outstanding operational efficiency. The company generates substantial profit from core operations.

Net Profit Margin

20.9%

Exceptional profitability. The company converts a significant portion of revenue to bottom-line earnings.

Effective Tax Rate

27.1%

Higher tax burden may reflect limited tax optimization or operations in high-tax jurisdictions.

Profitability Insight

Exceptional profitability across all levels: Strong pricing power, efficient operations, and healthy bottom line indicate a high-quality business with sustainable competitive advantages.

86.36%
Gross Profit Margin
3Y-4.0%
5Y-3.0%
10Y+1.0%
31.15%
Operating Profit Margin
7%
3Y+3.0%
5Y+29.0%
10Y+131.0%
20.94%
Net Profit Margin
-8%
3Y-12.0%
5Y-5.0%
10Y+87.0%
20.26%
Return on Equity
-10%
3Y-34.0%
5Y-14.0%
10Y-26.0%
10.92%
Return on Assets
-7%
3Y-34.0%
5Y-27.0%
10Y+13.0%
14.11%
Return on Invested Capital
5%
3Y-37.0%
5Y-26.0%
10Y+5.0%
CDNS

Cadence Design Systems, Inc. Cash Conversion Engine

CDNS ยท NASDAQ
Net Income1.11B
Depreciation & Amortization233.84M
Stock-Based Compensation455.18M
Change in Working Capital-73.25M
Others-61.92M
Capital Expenditures-141.87M
Free Cash Flow1.59B

Cash Flow Quality Analysis

FCF Conversion Rate

143.1%

Excellent cash generation. The company converts earnings to cash at or above 100%, indicating high-quality earnings.

CapEx Intensity

8.2%

Asset-light business model. Low capital requirements leave more cash available for shareholders and growth investments.

FCF Growth Trend

+41.9%

Strong FCF growth demonstrates improving cash generation and business momentum. Positive signal for sustainability.

Working Capital Impact

-$73.25M

Minimal working capital impact on FCF. Changes in operating assets and liabilities well-managed.

Cash Flow Quality Insight

Exceptional cash generation: High-quality earnings converting to growing free cash flow. The company demonstrates strong pricing power, efficient operations, and disciplined capital allocation.

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Cadence Design Systems, Inc. Funding & Solvency Profile

CDNS ยท NASDAQ
Cash & Cash Equivalents1.41B
Net Receivables1.03B
Inventory317.95M
Other Current Assets421.97M
Total Current Assets3 B
Property, Plant & Equipment536.90M
Goodwill & Intangible Assets6.86B
Long-Term Investments0.00
Other Non-Current Assets1.52B
Total Non-Current Assets2 B
Total Assets
12.10B

Financial Health Analysis

Current Ratio

3.56x

Excellent liquidity position. The company can easily cover its short-term obligations with substantial cushion.

Debt-to-Equity Ratio

0.39x

Conservative capital structure. The company relies primarily on equity financing, indicating low financial risk.

Working Capital

2 B

Strong working capital position provides significant operational flexibility and financial cushion.

Asset Composition

26% Current

Capital-intensive business with significant long-term investments in property, equipment, or intangibles.

Financial Health Insight

Strong financial foundation: Excellent liquidity combined with conservative leverage suggests the company is well-positioned to weather economic uncertainties and fund growth opportunities.

cdns

Cadence Design Systems, Inc. Street Expectations Map

CDNS ยท NASDAQ

Wall Street analysts project that CDNS stock may see slight declines over the coming 12 months. The consensus 1-year price target stands at 406.67, with estimates ranging from a low of 370.00 to a high of 440.00.

Lowest Target
370.00
-9.31%
Consensus Target
406.67
-0.33%
Highest Target
440.00
7.84%

The consensus 1-year price target stands at 406.67, with estimates ranging from a low of 370.00 to a high of 440.00.

Analyst Consensus Analysis

Upside Potential

-0.3%

Fair value territory. Stock trading near consensus target suggests limited near-term catalysts. Focus on fundamental developments.

Analyst Agreement

17.2% spread

High analyst agreement. Narrow target range indicates strong consensus on valuation, suggesting clear investment thesis and predictable outlook.

Risk-Reward Profile

0.84x

Unfavorable risk-reward. Downside risk exceeds upside potential. Consider defensive positioning or alternative opportunities.

Analyst Conviction

Moderate

Neutral sentiment. Fair value pricing with moderate agreement suggests wait-and-see approach or catalyst-driven opportunity.

Market Sentiment Insight

Efficient pricing: Stock trading at fair value with strong consensus suggests market has priced in expectations. Look for fundamental inflection points or new catalysts to drive meaningful moves.

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Cadence Design Systems, Inc. Insider Positioning

CDNS ยท NASDAQ

During the last 12 months, insiders have sold $31.42M worth of CDNS shares, with no buying activity reported.

3 Months

Bought

0

0.00

Sold

37.7K

12.13M

Net Activity

-12.1M

-$12.13M

3-6 Months

Bought

0

0.00

Sold

40.8K

13.49M

Net Activity

-13.5M

-$13.49M

6-9 Months

Bought

0

0.00

Sold

10.5K

3.46M

Net Activity

-3.5M

-$3.46M

9-12 Months

Bought

0

0.00

Sold

7.2K

2.35M

Net Activity

-2.3M

-$2.35M

Top Buyers

No buying activity

Top Sellers

1
WJM

Wall John M

Officer: Sr. Vp & Cfo

28.3K sharesโ€ข4 transactions

$8.84M

2
TC

Teng Chin-Chi

Officer: Sr. Vice President

23.4K sharesโ€ข7 transactions

$7.70M

3
DA

Devgan Anirudh

Director, Officer: President And Ceo

20.8K sharesโ€ข2 transactions

$7.07M

4
SP

Scannell Paul

Officer: Sr. Vice President

11.6K sharesโ€ข2 transactions

$3.93M

5
CP

Cunningham Paul

Officer: Sr. Vice President

12.0K sharesโ€ข12 transactions

$3.84M

Insider Activity Analysis

Net Insider Sentiment

Bearish

Strong bearish signal with $31.42M net selling. Heavy insider selling may indicate concerns about valuation or near-term prospects.

Buy/Sell Ratio

0.00:1

Very poor ratio. Heavy selling with minimal buying suggests insiders may be concerned about valuation or outlook.

Recent Trend (3 Months)

$12.13M

Heavy recent selling activity. Recent insider sales notably exceed purchasesโ€”may warrant investigation into company developments.

Insider Participation

High Selling

5 insider sellers vs. 0 buyers. Widespread selling across multiple insiders may signal concerns.

Insider Activity Insight

Multiple red flags: Heavy selling, numerous sellers, and continued recent selling create a concerning pattern. Investigate fundamental drivers and consider whether company guidance or industry conditions have deteriorated.

No Dividend Yield Data

CDNS has not reported any dividend yield values in the available annual periods.

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cdns Dividend History

CDNS
10Y CAGR +0%
Latest $0
Annual $0
Stable dividend payments
Last Period: +0%